BP, Verenium Target Cellulosic Ethanol

BP and Verenium have formed a partnership to accelerate the development of ethanol made from the enzymatic conversion of cellulosic raw materials.

Under the deal, BP will provide Verenium with $90 million in funding over the next 18 months. In exchange it will receive rights to current and future technology held by the new partnership. Verenium was formed last year through the merger of cellulosic ethanol developers Diversa and Celunol. Earlier this year, Verenium's auditors expressed concern about the company's financial well-being.

According to BP, ethanol made from raw materials such as sugarcane waste, rice straw, and wood chips offers multiple advantages over traditional corn-based ethanol, including higher yields per acre, minimal exposure to commodity price risks, and better greenhouse gas emission reductions. Sue Ellerbusch, president of BP Biofuels North America, says such crops "are the best feedstocks to deliver economic, sustainable, and scalable biofuels to the world."

Beyond this agreement the companies expect to negotiate a second phase in which they will build commercial-scale ethanol plants. Verenium opened a cellulose-based ethanol pilot plant in Jennings, La., three months ago.

The new partnership is one of several BP has formed to advance biofuels. In the U.K., it is working with DuPont on a $400 million plant that will produce ethanol and butanol from wheat. It also has an agreement with the British firm D1 Oils to make biodiesel out of oil extracted from the inedible jatropha plant.